Invest in America with Wefunder Opportunity Funds

Pay as little as $0 in capital gains over the next decade. Help entrepreneurs take their shot at the American Dream.

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What is an Opportunity Fund?

Opportunity Funds were created as part of the Tax Cuts and Jobs Act of 2017. They were designed to encourage investment in distressed communities called "Opportunity Zones" by shielding taxes on capital gains.

What are Opportunity Zones?

Opportunity Zones are census tracts that the 50 states have targeted for economic development. They include parts of Oakland, Detroit, LA, NYC, and Chicago. A zone also covers Puerto Rico. Here is a map of every zone.

Why invest in Opportunity Funds?

Opportunity Funds allow investors to defer federal taxes on any recent capital gains until December 31, 2026, reduce that tax by up to 15%, and pay as little as zero taxes on profits from an Opportunity Fund if held for 10 years.

At Wefunder, it's also part of our Charter to help more founders succeed at starting their businesses. We hope you'd like to help too.

How does the Opportunity Fund choose investments?

We combine our expertise with the wisdom of the crowd. Wefunder hires local community leaders, founders who have sold their companies, and experienced angel investors to help source and vet investments. The Opportunity Fund then matches the dollars contributed from the crowd. Wefunder makes the final decision after compliance and anti-fraud checks.

Quick Facts

Created by 2017 tax reform act

Invests in companies in "Opportunity Zones"

Includes zones in Oakland, Detroit, LA, NYC, and Puerto Rico

Investments chosen by experts & the crowd

Pay $0 tax on future gains if held 10 years

How do the Tax Savings work?

An investor who has a capital gain by selling an asset like stocks or real estate can receive tax benefits if they roll that gain into an Opportunity Fund within 180 days. There are three advantages to rolling over your gains into an Opportunity Fund:

Defer

the payment of your capital gains until Dec 31, 2026

Reduce

the tax you owe by up to 15% after 7 years

Pay $0

tax on Opportunity Fund capital gains if held until 2026

Example #1: Let's say you sell Amazon stock and have a $1M capital gain. Instead of paying $238K in taxes, you roll the full $1M into an Opportunity Fund, which invests in businesses in Opportunity Zones. In 2028, the Fund returns you $2M. No taxes are due on the $1M gain. You'll only pay $202,300 in deferred capital gains from the sale of Amazon stock 10 years prior.

Example #2: Assume you invest $100,000 in an Opportunity Fund that grows 7% annually. How will it compare to a traditional stock portfolio that also grows at 7%? It depends when you sell.

Learn more about the assumptions in this section. The example of a 7% return is for illustrative purposes only. There is no guarantee that a fund will return capital.

Opportunity Fund Partners

Wefunder selects investments based on the due diligence of partners "on the ground". We hire fund partners who have deep expertise and connections - local community leaders, successful founders who have sold their companies, and experienced angel investors. We have a roster of several hundred part-time partners with a diverse expertise we can call on. Here's a few.

Membership Criteria: Community leaders, entrepreneurs, and makers in Detroit

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How Investments are Made

A micro-Venture Capital fund run by "operators" on the ground

1

Choose a fund to invest in. Get inside access to deals.

Instead of trying to pick winners yourself, industry veterans do the work for you. You invest in a fund, and the partners decide which startups to invest in. You get notified with a report each time they invest, and may often choose to invest more directly.

2

We recruit a team of industry veterans to serve as partners

Wefunder Advisors recruits experts to be partners, compensating them with 15% carried interest (so they only make money if you make money). We favor founders with exits and those with "on the ground" operating experience, as we believe they have access to the best early-stage deals.

3

The partners scout out, vet, & mentor startups for you

Each fund is like a small decentralized VC firm, where the work is divided among the partners. The partners scout deals, do their due diligence, negotiate terms, and invest.

4

The partners must personally invest. They win if you win.

You share the same fate — they make money if you do, and they lose money if you do. The dollars that partners must personally invest varies by fund, from 5% to 50%.

5

Wefunder is ultimately responsible for your returns

Wefunder has final approval on which deals get funded. The partners are hired by Wefunder Advisors LLC, and are subject to our oversight. We manage each fund, and have a fudiciary responsibility to investors to act in their best interest.

Resources & News

Opportunity Funds are brand new and are only recently emerging as an investment vehicle. Here's some more reading material:

As of August 15th, 2018, the US Department of the Treasury has not released guidance on many of the questions left open by the Tax Cuts and Jobs Act of 2017. These open questions include, but are not limited to: (a) what kinds of gains, other than capital gains, if any, can be properly rolled into an Opportunity Fund, (b) how much time an opportunity fund will have to deploy the capital it has raised, (c) tax treatment of gains in an opportunity fund pass-through partnership, etc. Accordingly, the foregoing discussion of the various aspects of the Opportunity Zone program is based upon positions that we believe to be reasonable given the statute as currently written and prior Treasury and IRS precedent; however, there can be no assurance that the forgoing discussion will ultimately prove to be correct as Treasury begins issuing guidance and regulations on the Opportunity Zone program. Given such uncertainty, each prospective investor should consult with their personal tax advisors before making any investment into an opportunity fund, including the Wefunder Opportunity Fund.

About Wefunder

We're a Public Benefit Corporation with a mission to revitalize capitalism and keep the American dream alive. GDP growth is slowing. Wealth inequality is increasing. Entrepreneurship is dying across America; falling from 10.6% to 3.6% among those under 30 since 1989. We're reversing these trends by funding more deserving businesses across all of America, not solely Silicon Valley.

The calculations show an investor’s potential after-tax returns under different scenarios, assuming an investment of capital gains prior to December 31, 2019, a 10 year holding, annual investment appreciation of 7%, as selected by the user, and a long-term capital gains tax rate of 23.8% (federal capital gains tax of 20% and net investment income tax of 3.8%), only taking into account tax at a federal level (not state). Note, however, that the performance assumptions shown are for illustrative purposes only, and are not intended to reflect the actual experience of any individual investor.

The calculations for the standard stock portfolio are based on rolling over capital gains equal to $100,000, at an initial tax of 23.8% (using the same assumptions described above), into a standard stock portfolio, the remaining $76,200 of which then appreciates at a compounding return of 7%. At the end of each holding period, the investment in the standard stock portfolio is assumed to be sold and long-term capital gains at a tax rate of 23.8% paid on the capital gains from the investment in the standard stock portfolio.

The five-year hold calculations for the Opportunity Fund are based on rolling over capital gains equal to $100,000, at an initially deferred tax rate of 0%, into an Opportunity Fund, with the entirety of the $100,000 then appreciating at a compounding return of 7%, until the fifth year of the hold, at which time the initially deferred tax is reduced by 10% and the net amount is taxed at a rate of 23.8%. In addition, at the end of the holding period, when the investment is assumed to be sold, long-term capital gain at a tax rate of 23.8% is paid on the gains or profits from the investment in the Opportunity Fund itself.

The seven-year hold calculations for the Opportunity Fund are based on rolling over capital gains of $100,000, at an initially deferred tax of 0%, into an Opportunity Fund, with the entirety of the $100,000 then appreciating at a compounding return of 7%, until the seventh year of the hold, at which time the initially deferred tax is reduced by 15% and the net amount is taxed at a rate of 23.8%. In addition, at the end of the holding period, when the investment is assumed to be sold, long-term capital gain at a tax rate of 23.8% is paid on the gains or profits from the investment in the Opportunity Fund itself.

The ten-year hold calculations for the Opportunity Fund are based on rolling over gains of $100,000, at an initially deferred tax of 0%, into an Opportunity Fund, with the entirety of the $100,000 then appreciating at a compounding return of 70%, until December 31, 2026, at which time the initially deferred tax is reduced by 15% and the net amount is taxed at a rate of 23.8%, effectively reducing the principal invested in the opportunity fund accordingly. Thereafter, returns continue to compound at the same initial rate of 7%. At the end of the tenth year of the holding period, the investment in the Opportunity Fund is sold and the capital gains on the investment in the Opportunity Fund itself is taxed at a rate of 0%.

305 startups have raised $106,876,469 on Wefunder

Wefunder supports three different federal laws that allow startups to raise money legally. To comply with the law, Wefunder Advisors LLC and Wefunder Portal LLC (both owned by Wefunder Inc) also list startups depending on the regulation used.

Legal May 16th 2016

Regulation Crowdfunding

Wefunder Portal LLC

$72,020,033

for 219 startups

Legal Now

Regulation D

Wefunder Advisors LLC

$29,072,241

for 97 startups

Rare

Regulation A+

Wefunder Inc

$5,784,195

for 1 startup

We are the largest funding portal for Regulation Crowdfunding.

Some fine print: 1) These numbers include startups currently live on Wefunder if they pass their minimum target. 2) Some startups use two different laws at the same time (i.e., Regulation D and Regulation Crowdfunding).